In the corona pandemic, organic supermarkets, health food stores and health food stores were still among the crisis winners. But since energy and food prices have exploded as a result of the Ukraine war, the picture has changed. The customers stay away. Even traditional organic retailers are now struggling to survive.
“Organic supermarkets, health food stores and health food stores are currently suffering a significant drop in sales,” said trade expert Robert Kecskes from the market research company GfK of the German Press Agency. The reason: In view of tight budgets, many consumers are increasingly buying organic products in supermarkets or discounters.
According to the latest figures from GfK, sales in organic supermarkets in August were 10.8 percent below the previous year’s level. The health food stores and health food stores even recorded a minus of 37.5 percent. The head of the organic chain Alnatura Götz Rhen recently complained: “The organic market is currently experiencing its worst slump in 35 years.”
Many face bankruptcy
The first retailers already had to go to the bankruptcy court: The Bacher health food store chain, founded in 1927 and with more than 100 branches nationwide, filed for bankruptcy under self-administration in the summer. The chain Superbiomarkt with around 30 branches in North Rhine-Westphalia and Lower Saxony sought rescue in a protective shield procedure. But not only industry giants, also many small unpackaged shops are struggling to survive. And the trade journal “Lebensmittel Zeitung” warned: “The selection process has only just begun.”
“If you only look at the figures from the specialist stores, you could get the impression that, in view of the high inflation, organic no longer plays such a big role in consumer awareness. But that’s not true,” said Kecskes. Organic is even gaining market share. But people have changed their shopping behavior significantly in order to reconcile their desire for sustainable consumption with their diminishing financial leeway in view of the increased prices.
According to Kecskes, since the end of last year it has been observed that people are less likely to shop in organic specialty stores, which are often perceived as expensive, and are instead looking for cheaper alternatives. Step by step, consumers have shifted organic purchases to classic supermarkets such as Rewe or Edeka.
Consumers want it cheaper
“Now we see the next level due to the strong price increases,” said Kecskes. When shopping in the supermarket, more and more people are switching from organic branded products to organic private labels. Or the organic products would be bought directly from the discounter. “Consumers continue to buy organic, but cheaper.”
Manufacturers of branded goods in the organic sector are also feeling the effects of this. According to GfK, they lost around 8.9 percent of their sales between June 2021 and June 2022, while the retail chains’ own brands increased by 9 percent.
In fact, many consumers need to save. After all, according to the latest figures from the Federal Statistical Office, groceries were an average of 18.7 percent more expensive in September than a year earlier. And heating, refueling and electricity also became significantly more expensive.
Kecskes believes that if the financial problems of consumers in Germany continue to worsen in the coming months, the organic sector is threatened with further adversity. Many people still tried to continue buying organic products by switching to cheaper offers. But there could come a point when some people would have to do without them entirely in view of tight budgets.
But even if people’s financial situation improves again in the foreseeable future, Kecskes believes it won’t be easy for specialist retailers and manufacturers of branded goods to win back lost customers. On the contrary: “If people are satisfied with the cheaper private labels and discounter products that they have come to know now, that’s a real challenge.”
Federal Statistical Office on price development GfK on consumer behavior GfK on the development of retail brands
